SAP gears up for SaaS launch

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SAP has confirmed it will launch a line of business management software next month, featuring on-demand programs that it plans to deliver to mid-sized companies via the web.

The product, which SAP has been working on under the code name A1S, is set to be released on September 19 and will mark the company's first major foray into the software as a service (SaaS) space.

SAP has previously indicated that it intends to inject around $500 million into the latest member of its family as it tries to ramp up mid-market sales.

The combined financial and resource efforts being ploughed into A1S will see SAP taking on the likes of IBM, Microsoft, Oracle, Salesforce.com and smaller players in this area.

Although SAP is beefing up its activity in what is already a crowded market, it will be successful and users are likely to see much more focus on the A1S portfolio in the future, according to David Mitchell, software practice leader at analyst Ovum.

"A1S aims to inject a very substantial growth to SAP's mid-market activities - aiming to capture many more thousands of customers in a relatively short period of time... The mid-market does represent a large potential market, but it is also a congested market with many existing players. The continued focus on the mid-market by companies such as SAP will inevitably change the dynamics of that market, as it is certain that SAP and other international players will progressively win market share," he said.

By offering A1S as part of a SaaS model, SAP will be helping to address mid-sized businesses' key paint points such as rising complexity and the unpredictability of IT overheads, according to Mitchell.

"SaaS offerings from pure-play companies such as Salesforce.com have experienced rapid growth and adoption, and new players such as Workday have also entered the market. In many ways SaaS is becoming the strategy of choice for new market entrants," Mitchell added.

"Traditional companies such as Oracle, Microsoft and SAP have taken a wider approach to the on-demand category, mixing on-premise and off-premise approaches. A1S takes SAP much closer to a more purist model of SaaS than it has previously attempted, and is likely to become a very significant part of the SAP portfolio in the years ahead"

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